Bayview’s REIT Seeks Public Funds

Bayview Mortgage Capital, a new Maryland-based entity, is seeking up to $500m in private capital through an initial public offering, according to a Securities and Exchange Commission (SEC) filing Monday. Under management of Bayview Fund Management, a subsidiary of Bayview Asset Management, the new corporation will follow the tax structure of a real estate investment trust (REIT). It plans to use the funds it raises to purchase and manage residential and commercial mortgage loans, and mortgage-backed securities and other real estate-related securities. Bayview Mortgage Capital, which plans to trade on the New York Stock Exchange under the symbol “BAY,” noted the market for non- and sub-performing loans is likely to grow, with the Federal Reserve‘s latest flow of funds report tracking more than $4trn in US residential mortgages outstanding as of year-end 2008. “We believe that the current market creates unique opportunities to acquire mortgage loans and mortgage-related assets at significant discounts to their unpaid principal balances,” the company said in the filing. “We believe that the decline in the prices of mortgage loans during the current economic downturn is, in large part, due to increasing default rates and declining values of real estate collateral.” In the SEC filing, it said it will provide risk-adjusted returns to investors by purchasing assets at a discount and maximizing their value through servicing capabilities and loss mitigation strategies. In particular, the company mentioned that Bayview Loan Servicing on July 1 signed on to participate in the US Treasury Department‘s Home Affordable Modification Program, which allocates incentive funds for use as interest rate subsidies or payments to lenders/servicers and borrowers that participate. The company’s parent is partially owned by The Blackstone Group (BX), which purchased a 46% interest in Bayview Asset Management. Write to Diana Golobay. Disclaimer: the author held no relevant investments at the time of publication.

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